Withholding Tax on Rent: How to Complete BIR Form 2307 for Lessors

A lessee that withholds tax on rent must deduct 5% expanded withholding tax (EWT) from the gross rental and issue BIR Form 2307 to the lessor, under Revenue Regulations (RR) No. 11-2018. This applies to real property used in business regardless of amount, and to personal property rentals once the annual gross rental exceeds ₱10,000.

This guide is part of the BIR Form 2307 series. It covers who must withhold on rent, the applicable rate and ATC code, and a worked example showing what goes on the certificate.

Who must withhold tax on rental payments? #

A lessee must withhold tax on rent only if the lessee is itself a withholding agent — a corporation, or an individual engaged in business or in the practice of a profession, paying rent as part of that business. A private individual renting a home purely for personal residence is not a withholding agent and has no withholding obligation on that rent.

Typical withholding agents on rent:

• A retail business renting commercial space for a store or warehouse
• A company leasing office space from a real estate lessor
• A professional (e.g., a clinic or law office) renting business premises
• A business renting equipment, vehicles, or other personal property used in operations

What is the withholding tax rate on rent? #

The withholding tax rate on rent is 5%, applied to the gross rental payment, under RR No. 11-2018, which amended the expanded withholding tax rules in RR No. 2-98 to implement the TRAIN Law (Republic Act No. 10963). The 5% rate covers two categories, with different scope:

RR No. 11-2018 also brings billboard and advertising-space rentals, and cinematographic film rentals, under the same 5% category. The lessee remits the withheld amount using BIR Form 0619-E monthly and BIR Form 1601-EQ quarterly, and reports it on the Quarterly Alphalist of Payees (QAP) — see How to Convert Excel to BIR DAT File for QAP for how that alphalist is prepared.

Which ATC code applies to a rental payment? #

The Alphanumeric Tax Code (ATC) on BIR Form 2307 for a rental payment depends on whether the lessor is an individual or a corporation:

• WC100 — lessor is a corporation
• WI100 — lessor is an individual

Selecting the wrong ATC misstates the payee category on the certificate, which is one of the common BIR Form 2307 mistakes that can complicate a lessor’s tax credit claim during BIR matching against the withholding agent’s own alphalist.

Worked example: withholding on a commercial lease #

Suppose a retail business leases a storefront from a corporate lessor for a gross monthly rent of ₱80,000. As a withholding agent, the lessee computes and withholds as follows:

The lessee pays the lessor ₱76,000 in cash, remits the ₱4,000 withheld to the BIR, and issues a BIR Form 2307 to the lessor showing ₱80,000 as the income payment, ATC WC100, and ₱4,000 as tax withheld. The lessor then credits that ₱4,000 against its own income tax due for the period when filing BIR Form 1702 (or 1701 if an individual lessor), attaching the certificate as support — or reporting it through SAWT.

Frequently asked questions #

What is the withholding tax rate on rent in the Philippines? #

A lessee that is a withholding agent must withhold 5% expanded withholding tax on the gross rental for real property used in business, and on personal property rentals exceeding ₱10,000 annually, under Revenue Regulations No. 11-2018 (amending RR No. 2-98).

Does every tenant have to withhold tax on rent? #

No. Only lessees who are themselves withholding agents — corporations, and individuals engaged in business or practice of a profession — must withhold on rent paid in the course of that business. A private individual renting an apartment purely for personal residence is not a withholding agent and does not withhold.

Which ATC code applies to rental payments on BIR Form 2307? #

ATC WC100 applies when the lessor is a corporation, and ATC WI100 applies when the lessor is an individual, both under Revenue Regulations No. 11-2018’s 5% rental withholding rate.

Is there a minimum rental amount before withholding applies? #

For real property used in business, there is no minimum — the 5% rate applies to the full gross rental regardless of amount. For personal property, withholding applies only once the annual gross rental exceeds ₱10,000.

How does the lessor use the BIR Form 2307 received from a tenant? #

The lessor attaches the BIR Form 2307 received from the tenant to their own income tax return (BIR Form 1701 or 1702) or reports it through SAWT, crediting the withheld amount against their income tax due for the period.

Summary #

Rent withholding is a fixed 5% under RR No. 11-2018, split only by ATC code — WC100 for a corporate lessor, WI100 for an individual — with no minimum on real property and a ₱10,000 annual threshold on personal property. Getting the ATC and the gross-vs-net amounts right on BIR Form 2307 keeps the certificate matching cleanly against both the lessee’s alphalist and the lessor’s own tax credit claim; see What Is BIR Form 2307 and When Must You Issue It? for the certificate’s general issuance rules.